John Ransom - No More  Sale at Penney's; It looks expensive
Posted: 2/28/2014 10:39:00 AM EST

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines:

Stock number one: J.C. Penney

J.C. Penney Shares Notch Biggest Gain in at Least 30 Years --Wall Street Journal

Shares surged as much as 26% Thursday, on track for the biggest one-day percentage gain in at least 30 years, according to FactSet. The rally comes after the struggling department store chain late Wednesday offered a few bright spots in its quarterly report and its 2014 outlook.

Penney posted a profit over the holidays and expects a narrow improvement in sales to persist in the current quarter. The company is trying to claw its way back from a disastrous overhaul that led to a 25% drop in sales and a $985 million loss a year earlier.

Symbol: JCP

Trailing PE: NA; Forward PE: NA

PEG: 0.07

Dividend: NA

Estimate Trend: Flat

Ransom Note Trendline: Sell J.C. Penney

JCP Chart

JCP data by YCharts

Stock number two: Swift Energy Co.

Swift Energy reports EPS in-line, misses on revs; guides FY14 - Briefing.com

Reports Q4 (Dec) earnings of $0.13 per share, in-line with the Capital IQ Consensus of $0.13; revenues fell 7.5% year/year to $146 mln vs the $148.06 mln consensus. This decrease is primarily attributable to lower oil production volumes, coupled with lower oil prices. Swift Energy currently plans to balance its 2014 capital expenditures with its operating cash flow, available bank line and proceeds from announced asset sales and joint venture activity.

Symbol: SFY

Trailing PE: 14 Forward PE: 18

PEG: 1.85

Dividend: NA

Estimate Trend: Partly Cloudy

Ransom Note Trendline: Sell Swift Energy

SFY Chart

SFY data by YCharts

Stock number three: Catamaran Corporation

Catamaran weakness a buying opportunity, says Jefferies- Fly on the Wall

Jefferies expects shares of Catamaran to be under "intense pressure" due to the company's "weak" guidance. The firm recommends buying the stock on weakness saying Catamaran is likely to sustain its strong top-line growth. Jefferies has a Buy rating on the stock with a $70 price target.

Symbol: FB

Trailing PE: 53; Forward PE: 19

PEG: 1.08

Dividend: NA

Estimate Trend: Flat

Ransom Note Trendline: Avoid Catamaran Corporation

CTRX Chart

CTRX data by YCharts

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Mike Shedlock - Weekly Unemployment Claims "Unexpectedly" Rise; Claims in Recession Pattern?
Posted: 2/28/2014 10:00:00 AM EST

Weekly unemployment initial claims unexpectedly rose to 348,000 this week.

The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, but the underlying trend suggested no shift in labor market conditions.

Initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 348,000, the Labor Department said on Thursday. Claims for the prior week were revised to show 2,000 fewer applications received than previously reported.

Economists polled by Reuters had forecast first-time applications for jobless benefits slipping to 335,000 in the week ended Feb. 22, which included the Presidents Day holiday.

While last week’s increase pushed them to the upper end of their range so far this year, it probably does not signal labor market weakness as claims tend to be volatile around federal holidays.


Weekly Claims Since 1967



Recession Pattern?

Once claims bottom then start to rise, the above chart shows a recession usually follows. The only exception was 1993, smack in the middle of an internet boom.

It's impossible to know if claims have indeed bottomed, but a secondary pattern shows this is an area in which claims bottomed five out of the last six times. If claims bottomed again now, it would make six out of seven.

This "unexpected" event coincides with numerous other "unexpected" events, nearly all of them weaker than expected.

String of Unexpected Events


Reuters said this "probably does not signal labor market weakness". I suggest weakness is nearly everywhere you look.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/2014/02/weekly-unemployment-claims-unexpectedly.html#lYTiQP2IFeZ2GcHH.99

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John Ransom - Billionaire Buys Fannie and Freddie
Posted: 2/27/2014 10:39:00 PM EST

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines:

Stock number one: Federal National Mortgage Association

1 Billionaire Tells Us Why He Owns Nearly 10% of Fannie Mae and Freddie Mac--Motley Fool

In November, Pershing Square Capital Management disclosed it has a 9.98% stake in Fannie Mae and a 9.77% position in Freddie Mac. The fund is headlined by activist investor Bill Ackman, who is recently known for his conflict with other activist investor Carl Icahn over the direction of nutrition company Herbalife -- Icahn famously disputed Ackman's decision to short the company -- and his major position in J.C. Penney, on which he lost an estimated $400 million.

Note: Ackman, according to Fool thinks there is 1,000-1,500 percent upside.

Symbol: FNMA

Trailing PE: NA; Forward PE: 1.88

PEG: 0.26

Dividend: NA

Estimate Trend: Flat

Ransom Note Trendline: Avoid Fannie Mae

FNMA Chart

FNMA data by YCharts

Stock number two: Ford Motor Co.

Ford's Approach To Achievable Growth In A Depressed European Market- Seeking Alpha

It is understandable that you could be pessimistic about the outlook for the European new vehicle market. After all, 2013 saw the lowest sales level across Europe since the economic crisis began, with sales of just 13.7 million vehicles - a far cry from the more than 18 million vehicles sold in 2007 - and with sales declining every year since 2008. While the market might now have hit rock bottom and some improvement is expected in 2014, recovery will be modest with volumes increasing to about 15 million vehicles a year by mid-decade, by Ford's (F) projection.

Symbol: F

Trailing PE: 8.74 Forward PE: 8.02

PEG: 0.98

Dividend: 3.30%

Estimate Trend: Up

Ransom Note Trendline: Buy Ford

F Chart

F data by YCharts

Stock number three: Facebook, Inc.

WhatsApp may generate significant revenue for Facebook, analyst says- Fly on the Wall

In 2016, WhatsApp will generate $685M in revenue for Facebook (FB), and the social networking giant could obtain tens of billions of dollars of revenue from the start-up over the longer term, research firm Sterne Agee predicted in a note to investors earlier today. WHAT'S NEW: In 2015, WhatsApp will generate $344M in revenue, Sterne Agee analyst Arvind Bhatia estimated. In the following year, the service's revenue will reach $685M, he predicted

Symbol: FB

Trailing PE: 116; Forward PE: 42

PEG: 1.73

Dividend: NA

Estimate Trend: Flat

Ransom Note Trendline: Hold Facebook

FB Chart

FB data by YCharts

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Nick Sorrentino - Soros group triples its lobbying spending
Posted: 2/25/2014 12:39:00 PM EST

The yin to the Koch’s yang, Soros seems to have a hand in nearly everything “progressive.” From Media Matters, to The Center for American Progress, to support for Bill DeBlasio, to Obama’s Organizing for Action, to literally dozens of other political non-profits and advocacy groups, the man likes to spend his money on things which grow the state.

I am convinced that there is a huge swathe of the “liberal” population who advocate for statism and just don’t know better. They honestly think they are advocating for justice, and peace, and the rest. I think this is true on occasion even for people who find themselves in Congress, and nearly always true for statists under 35 or so.

I can’t say that about Soros of course, who is a brilliant man with 8 decades under his belt. I think he knows exactly what a powerful state does to the average person and he sees that as preferable to the rednecks running around willy-nilly advocating for “liberty” and clinging to their bourgeois ways of thinking and being.

You see Mr. Soros knows best, and the heathens need to be managed for their own good.

In the attached article it states that in 2013 Soros’s group spent $11 million in lobbying efforts.

That might sound like a lot but it is nothing compared to the billions he has spent juicing “progressive” candidates and causes since the mid-1990s. Soros’s network is deep and it is wide. He might be the most influential person on the American Left right now. I can’t think of anyone in that tribe who wouldn’t take his phone call.

(From the Washington Post)

Soros and his generous support of liberal causes, through his philanthropy and his personal political spending, have long been the subject of conservative ire. But, until now, he hasn’t done much on the formal lobbying front, and the group’s huge increase in reported spending — it hit $11 million in 2013, more than triple the $3.25 million it spent the previous year — has drawn remarkably little notice.

The big jump placed the Soros group 27th in a recent year-end lobbying tally by the Center for Responsive Politics — just below defense giant General Dynamics and ahead of corporate powerhouses Dow Chemical, Chevron and Microsoft.

Click here for the article.

Read More at Against Crony Capitalism.org

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John Ransom - Biotech Surges, While Others Droop
Posted: 2/25/2014 12:39:00 PM EST

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines:

Stock number one: TriQuint Semiconductor, Inc.

RF Micro, TriQuint Merger May Not Satisfy Activist Investor--24/7 Wall Street

RF Micro Devices Inc. (NASDAQ: RFMD) announced Monday morning that it will merge with TriQuint Semiconductor Inc. (NASDAQ: TQNT) in an all-stock transaction valued at around $1.6 billion. The transaction is set up as a tax-free restructuring, and current shareholders of each company will each hold about 50% of the merged firm. The deal is expected to close in the second half of the year and is subject to a vote of both companies’ shareholders and other routine approvals.

Symbol: TQNT

Trailing PE: NA; Forward PE: 18

PEG: 2.05

Dividend: NA

Estimate Trend: Up

Ransom Note Trendline: Sell TriQuint

TQNT Chart

TQNT data by YCharts

Stock number two: Kinder Morgan Energy Partners, L.P.

Kinder Morgan Falls Amid Questions on Cash Flow - Bloomberg

Kinder Morgan Energy Partners LP, the second-biggest U.S. pipeline company, fell the most in almost four years after a Barron’s article said the partnership has overstated cash flows and is overpriced.

The operator of 82,000 miles (132,000 kilometers) of oil and natural gas pipelines declined 3.5 percent to $75.69 at 10:40 a.m. in New York, after earlier having its biggest intraday drop since May 2010. Kinder Morgan Inc. (KMI), its parent company, fell as much as 4.8 percent and Kinder Morgan Management LLC (KMR), which manages the partnership, declined as much as 4.9 percent.

Symbol: KMP

Trailing PE: 20 Forward PE: 27

PEG: 4.28

Dividend: 6.90%

Estimate Trend: Up

Ransom Note Trendline: Hold Kinder Morgan

KMP Chart

KMP data by YCharts

Stock number three: Trex Co. Inc.

Deck Maker Trex Tops Q4 Views, Announces Stock Split- Investor's Business Daily

Shares of Trex (TREX) rose sharply in early trading in the stock market after the maker of wood-alternative deck products breezed past quarterly sales and profit views and announced a 2-for-1 stock split. Trex is the nation's No. 1 supplier of wood-plastic composite decking and railing for residential and commercial markets. It reported fourth-quarter earnings of 23 cents a share. That reversed a loss of 13 cents the prior year and easily beat consensus estimates for 6 cents. Improving margins helped prop up the bottom line.

Symbol: TREX

Trailing PE: 93; Forward PE: 30

PEG: 1.03

Dividend: NA

Estimate Trend: Flat

Ransom Note Trendline: Sell Trex

TREX Chart

TREX data by YCharts

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Mike Shedlock - Monetarism, Abenomics, QE, and Minimum Wage Proposals: One Bad Idea Leads to Another, and Another
Posted: 2/25/2014 12:38:00 PM EST

Telegraph writer Ambrose Evans-Pritchard is back at it. In arguably his worst article ever, Pritchard complains France is Looking Straight Down the Barrel of a Deflation Shock.

Pritchard bemoans the horrors of falling prices and says "There is a technical solution to this. It is called QE. The European Central Bank can lift the entire EMU system off the reefs by launching a monetary blitz to meet its own M3 growth target of 4.5pc."

Pritchard ignores the fact that equity prices are back in bubble land. He ignores the fact that QE did not bring inflation to Japan. He ignores the fact that consumers desperately need falling prices. He ignores the fact that falling consumer prices do not stop consumers from buying anything.

Pritchard complains "French President François Hollande must now pay the price for kowtowing to the contraction polices of the eurozone."

Pritchard knows full well France is bound by eurozone policies. The only way France cannot "kowtow to the contraction polices of the eurozone" is if France leaves the eurozone. But Pritchard never mentions that. Instead he whines about falling prices.

One Centrally Bad Idea

Pritchard clings to the centrally bad idea that falling consumer prices will cause consumers to perpetually delay purchases.

In the real world, people have to eat. They have to buy gasoline for their cars. They have to buy clothes when they wear out. They have to heat their homes.

Those are relatively inelastic demands.

But there is also no evidence consumers will hold off for long on discretionary spending either. Every Christmas, shoppers line up for bargains. People continue to upgrade TVs, computers, monitors as they wear out, or simply because prices are lower and quality is up since they last bought.

In other words, people buy when bargains are many and stop buying when bargains are few.

Living Wages

Pritchard's solution is the same as that of many charlatans before him: Force prices up.

The Fed succeeded. As a result, people now bitch and moan about "living wages". Of course "living wages" are a moving target. Force prices higher and the more it takes to keep up with them.

People want $15 an hour for standing behind a cash register and handing you a sack of the worst food money can buy. It's ridiculous.

Hardly anyone ever points out the fact that wages have not kept up with inflation precisely because the Fed has done exactly what Pritchard wants.

People do not blame the Fed, nor do they blame economic illiterates like Pritchard. Instead they blame allegedly evil corporations like McDonalds and Walmart.

Actually, the world needs more Walmarts. I hope Walmart enters the health-care business in a big way. Costs would come down overnight. It would also be great if Walmart could directly compete with banks on financial services.

Costs Rising Faster than Wages

The problem is not that wages are too low, but rather costs rise faster than wages. Why does that happen? Because of the very central bank polices espoused by Monetarists like Pritchard.

Pritchard and others will note that falling home prices will slow bank lending and consumer credit. That is correct. OK, but what's the real problem?

The real problem is monetary inflation artificially jacked up the prices of assets (homes, cars, equities) upon which unsustainable loans were made. Rather than admitting that simple and obvious fact, Monetarists propose the solution is still more monetary printing which will do nothing but create even bigger asset bubbles.

Brief History

  • Monetarists act on the theory falling prices are a bad idea
  • The Fed prints money and holds rates too low
  • Housing bubble builds
  • Medical and education prices soar
  • Student loans soar to "help" the students
  • Because housing is not affordable numerous affordable housing programs appear causing still more unwarranted housing demand. Few see the bubble because housing is not in the CPI
  • Housing crashes
  • The affordable housing advocates are abhorred by falling prices
  • Fed bails out banks and steps in to support housing prices
  • Income inequality soars
  • Students remain stuck with debt

Because of one idiotic notion, that "falling prices are a bad thing", the Fed has generally managed to keep the CPI rising, with some things going up much faster than others.

In response to uneven price inflation, we have seen numerous "affordable housing" programs, massive student aid programs, bank bailouts at taxpayer expense, Obamacare to make medical insurance affordable, cash for clunkers, Abenomics in Japan, and countless other economic idiocies.

People propose bad idea after bad idea simply to fix problems caused by the previous bad idea. This is corollary six to the Law of Bad Ideas.

Law of Bad Ideas Corollary Six: Bad ideas lead to more bad ideas to fix problems caused by previous bad ideas.

Pritchard, like many before him and countless others yet to come, want higher inflation rates. Here is a table I put together that shows the silliness of it all.
Effect of Inflation Over Time





Year 2% Annual Inflation 4% Annual Inflation 6% annual inflation 10% annual inflation
1 100.00 100.00 100.00 100.00
2 102.00 104.00 106.00 110.00
3 104.04 108.16 112.36 121.00
4 106.12 112.49 119.10 133.10
5 108.24 116.99 126.25 146.41
6 110.41 121.67 133.82 161.05
7 112.62 126.53 141.85 177.16
8 114.87 131.59 150.36 194.87
9 117.17 136.86 159.38 214.36
10 119.51 142.33 168.95 235.79
11 121.90 148.02 179.08 259.37
12 124.34 153.95 189.83 285.31
13 126.82 160.10 201.22 313.84
14 129.36 166.51 213.29 345.23
15 131.95 173.17 226.09 379.75
16 134.59 180.09 239.66 417.72
17 137.28 187.30 254.04 459.50
18 140.02 194.79 269.28 505.45
19 142.82 202.58 285.43 555.99
20 145.68 210.68 302.56 611.59
21 148.59 219.11 320.71 672.75
22 151.57 227.88 339.96 740.02
23 154.60 236.99 360.35 814.03
24 157.69 246.47 381.97 895.43
25 160.84 256.33 404.89 984.97
26 164.06 266.58 429.19 1083.47
27 167.34 277.25 454.94 1191.82
28 170.69 288.34 482.23 1311.00
29 174.10 299.87 511.17 1442.10
30 177.58 311.87 541.84 1586.31
31 181.14 324.34 574.35 1744.94
32 184.76 337.31 608.81 1919.43
33 188.45 350.81 645.34 2111.38
34 192.22 364.84 684.06 2322.52
35 196.07 379.43 725.10 2554.77
36 199.99 394.61 768.61 2810.24
37 203.99 410.39 814.73 3091.27
38 208.07 426.81 863.61 3400.39
39 212.23 443.88 915.43 3740.43
40 216.47 461.64 970.35 4114.48
41 220.80 480.10 1028.57 4525.93
42 225.22 499.31 1090.29 4978.52
43 229.72 519.28 1155.70 5476.37
44 234.32 540.05 1225.05 6024.01
45 239.01 561.65 1298.55 6626.41
46 243.79 584.12 1376.46 7289.05
47 248.66 607.48 1459.05 8017.95
48 253.63 631.78 1546.59 8819.75
49 258.71 657.05 1639.39 9701.72
50 263.88 683.33 1737.75 10671.90



The above table shows what the price of something that costs $100 in year one will cost 49 years later at various inflation rates.

None of these inflation charlatans discuss what happens if wages do not keep up. Nor do they discuss the incentives businesses have to outsource jobs or automate because of high wages.

Amazingly, many people in academic wonderland are not satisfied with 2% annual inflation. They want 4% inflation or higher. For example, Laurence Ball at John Hopkins University claims to make a Case for Four Percent Inflation.

Ball is "grateful for suggestions from Olivier Blanchard, Daniel Leigh, Gregory Mankiw, and Richard Miller. This paper is prepared for the Central Bank Review, published by the Central Bank of the Republic of Turkey."

His paper was written in April 2013.

How is the Turkish Lira doing since that paper came out? Let's take a look.



Hmm. Once inflation steps in it seems difficult to turn it off.

Ball cited Gregory Mankiw, an economic professor at Harvard, who had an even more inane idea of drawing a number out of the hat every year and making currency ending in that digit worthless.

The effect would be 10% price inflation and lord only knows what asset price inflation would occur were Makniw to get his way.

Mankiw claims expiring currency would be a benefit. I responded Time For Mankiw To Resign

These charlatans sit in their academic ivory towers void of common sense and real world economics.

Of course economically asinine proposals from those in academic wonderland is expected behavior by corollary number four.

For the sake of completeness, here is a complete recap.

Law of Bad Ideas: Bad ideas don't go away until they have been tried and failed multiple times, and generally not even then.

Corollary One: Left alone, bad ideas get worse over time.

Corollary Two: The overwhelming desire to implement bad ideas leads to compromises guaranteed to make things worse.

Corollary Three: Those in positions of political power not only have the worst ideas, they also have the means to see those ideas are implemented.

Corollary Four: The worse the idea, the more likely it is to be embraced by academia and political opportunists.

Corollary Five: No politically acceptable idea is so bad it cannot be made worse.

Corollary Six: Bad ideas lead to more bad ideas to fix problems caused by previous bad ideas.

Although there is strong evidence that consumers will hold off making asset purchases (homes, stocks, bonds), when asset prices fall, there is not a shred of evidence of a meaningful reduction in consumer purchases due to falling consumer prices.

The irony is that QE tends to foster asset bubbles that ultimately crash, not a price rise in general goods.

Central banks in general, and the Fed in particular, are excellent examples of those in power, hell bent on implementing various bad ideas.

For further discussion please see Deflation Theory Reality Check.

Also see Bubblicious Questions: What Causes Economic Bubbles? When Do Bubbles Burst? Can the Fed Prevent Bubbles?

In yet another irony in this madness, monetarist polices benefit those with first access to money, namely the banks and the already wealthy. Yet the same academics screaming for higher inflation are typically the same ones screaming about income inequality.

The amount of damage caused by one central thesis "falling prices are a bad thing" is staggering. And to fix problems inherent in that central thesis, countless other bad ideas are sure to follow.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/2014/02/monetarism-abenomics-qe-minimum-wage.html#ldCWBQgj4gmrSZaz.99

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John Ransom - Bank of America Still Has Room for Improvement
Posted: 2/23/2014 7:54:00 PM EST

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines:

Stock number one: Emeritus Corp.

Why Emeritus Corp. Shares Soared--The Motley Fool

What: Shares of Emeritus (NYSE: ESC) skyrocketed as much as 41% after the operator of senior living facilities in the United States agreed to be purchased by Brookdale Senior Living (NYSE: BKD) for $1.4 billion ($2.8 billion including debt).

So what: Under the terms of the deal, which was announced after the closing bell last night, Emeritus shareholders will receive 0.95 shares of Brookdale common stock, valuing the company at $29.58 per share as of this writing.

Symbol: ESC

Trailing PE: NA; Forward PE: NA

PEG: NA

Dividend: NA

Estimate Trend: Flat

Ransom Note Trendline: Sell Emeritus Corp.

ESC Chart

ESC data by YCharts

Stock number two: Groupon, Inc.

Groupon Earnings Outlook Disappoints, Stock Falls- Investor's Business Daily

Daily deals company Groupon's (GRPN) Q1 sales guidance blew away analyst expectations, but the company said its full-year earnings would be only "slightly above" 2013 levels, sending the stock plummeting Friday.

The Chicago-based company late Thursday said it expects current-quarter sales of $710 million to $760 million, or $735 million at the midpoint. Analysts had been modeling $669 million, according to Thomson Reuters.

Symbol: GRPN

Trailing PE: NA Forward PE: 21

PEG: 1.55

Dividend: NA

Estimate Trend: Flat

Ransom Note Trendline: Hold Groupon

GRPN Chart

GRPN data by YCharts

Stock number three: Bank of America

Bank of America Gives CEO a $2 Million Raise- The Motley Fool

Bank of America (NYSE: BAC) announced on Wednesday that its chief executive officer, Brian Moynihan, got a $2 million raise for fiscal year 2013.

The news comes on the heels of yet another positive development for the bank, as a judge in New York refused to throw out an $8.5 billion settlement that Bank of America entered into in 2011. The ruling means the Charlotte-based bank is one giant step closer to fully atoning for its sins from the financial crisis.

But does this progress mean Moynihan deserved a nearly 17% raise? Motley Fool contributor John Maxfield thinks so.

Symbol: BAC

Trailing PE: NA; Forward PE: NA--- Price to book is key: 0.79

PEG:

Dividend: 0.20%

Estimate Trend: Up

Ransom Note Trendline: Buy Bank of America

BAC Chart

BAC data by YCharts

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Nick Sorrentino - Joe Trippi: Technology is killing cronies, and there will be a libertarian president. And sooner than you think. (Video)
Posted: 2/21/2014 10:29:00 AM EST

Trippi is an old time Democratic consultant who is very smart and his analysis here is interesting. This is a video well worth watching for those who care about the massive political changes going on right now especially on the so called American “Right.” He sees the libertarian movement as perhaps the most important movement in American politics and a movement which will change (and is changing) the political landscape.

He, in my estimation makes a mistake however early in the interview and it is one I see with my liberal friends often. He argues that the “libertarians” and the Tea Party are distinct groups. I think this is wrong. There is much cross pollination. In fact I would say that the heart of the Tea Party is libertarian. The Tea Party is the Taxed Enough Already party. That is fundamentally libertarian. And people forget that Ron Paul founded the Tea Party.

Liberals always focus on the perceived socially conservative elements within the Tea Party, and though those elements exist they are less and less important with each passing year. I see the Tea Party as increasingly classically liberal, especially as people educate themselves about the Constitution and about what “small government” actually means.

That aside Trippi’s take on how technology is changing business and politics is right on.

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John Ransom - HomeAway Hits High; Sell the High
Posted: 2/21/2014 10:13:00 AM EST

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines:

Stock number one: Conns Inc.

Conn's plunges after cutting profit forecasts for this year and next--Fly on the Wall

Shares of Conn's (CONN), a retailer of electronics, appliances, furniture and other home goods that also provides consumer credit to support purchases, are plunging after the company issued weaker than expect fourth quarter earnings guidance and lowered its fiscal 2014 and 2015 profit forecasts. WHAT'S NEW: This morning, Conn's forecast fourth quarter adjusted EPS of 75c-80c, far below expectations of 93c. The company also lowered its FY14 adjusted EPS view

Symbol: CONN

Trailing PE -17; Forward PE: 10

PEG: 0.90

Dividend: NA

Estimate Trend: Flat

Ransom Note Trendline: Sell Conns

CONN Chart

CONN data by YCharts

Stock number two: HomeAway

HomeAway Q4 Results Affirm Upbeat Online Travel Trend- Investor's Business Daily

HomeAway (AWAY) stock hit an all-time high Thursday after the online vacation home rental company late Wednesday reported Q4 earnings ahead of expectations and raised its Q1 guidance.

HomeAway revenue rose 26% from the year-earlier quarter to $90.3 million, its biggest gain in two years, beating views of $87.5 million. But HomeAway earned 8 cents a share, missing consensus estimates of 14 cents, as IBD reported. The results included an unspecified one-time expense related to its $200 million acquisition of Australia-based Stayz Group.

Symbol: AWAY

Trailing PE: 171 Forward PE: 52

PEG: 2.38

Dividend: NA

Estimate Trend: Flat

Ransom Note Trendline: Sell HomeAway

AWAY Chart

AWAY data by YCharts

Stock number three: Goodrich Petroleum Corp

Why Goodrich Petroleum (GDP) Is Plummeting Today- The Street.com

Goodrich Petroleum(GDP_) was plunging 17% to $12.69 on Thursday after the oil company announced fourth-quarter results that came up short of analysts' expectations.

The company reported fourth-quarter revenue of $50.6 million, up from $48.2 million in the same period a year earlier. Goodrich posted a loss of 73 cents a share for the fourth quarter. Analysts surveyed by Thomson Reuters expected a loss of 48 cents a share on revenue of $62.4 million during the period.

Symbol: GDP

Trailing PE: NA; Forward PE: NA

PEG:

Dividend: NA

Estimate Trend: Up

Ransom Note Trendline: Sell Goodrich Petroleum Corp

GDP Chart

GDP data by YCharts

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Mike Shedlock - Ukraine's President Replaces Head of Armed Forces, Military Intervention Feared; Financial Crisis Threatens Russia; What's in Store for the Ruble?
Posted: 2/21/2014 9:24:00 AM EST

The situation in Ukraine grows more desperate by the hour. President Viktor Yanukovic had already replaced the head of the army. Today Yanukovic replaced the head of all armed forces.

Given that lower ranks are divided in support, calling out the military could start an all-out civil war.

“If there is a decision to use force to clear the protesters, it can be done but will start a civil war,” said Ihor Smeshko, former head of Ukraine’s SBU security services. “The army is so far neutral, but if it is pulled into this conflict it will be a point of no return. Army personnel are themselves split 50/50 in their views of Ukraine.”

The government prepared the way for using the army on Wednesday, when the defence ministry said the military could be deployed in “antiterrorist” operations. Authorities and legal experts had previously said the army could only be used within Ukraine if a state of emergency was imposed.

Mr Yanukovich on Wednesday night also replaced the head of all Ukraine’s armed forces with the former navy chief – just weeks after he already replaced the head of the army – in what appeared to be a move to ensure loyalty in the top ranks.

“[The Yanukovich government] have put their placemen into the army,” said James Sherr, a Ukraine scholar at London’s Chatham House think-tank. “But still the question is what proportion of units would obey such orders?”

Financial Crisis Threatens Russia

The Telegraph reports Financial crisis threatens Russia as Ukraine spins out of control

The dramatic escalation of Ukraine’s civil conflict and fears of Russian military intervention have sent financial tremors across Eastern Europe, turning the region into the new fulcrum of the emerging market crisis.

“This has suddenly gone from a domestic Ukrainian story into a geopolitical clash,” said Lars Christensen, from Danske Bank.

The Russian ruble has fallen to a record low against the euro, with contagion reaching Poland, Hungary and Romania in recent days. “The moves in Russia are very like the events during the war in Georgia in 2008. Markets are pricing in the risk of Russian intervention,” he said.

Regis Chatellier, from Societe Generale, said there is a “high risk” that Ukraine will be pushed into default on its €60bn sovereign debt, triggering a credit shock for Russian banks. Sberbank and VTB are both large holders of Ukrainian bonds. Global emerging market bond funds hold 3pc of their portfolio in Ukrainian debt. “The spillover effect of a Ukrainian default would be significant, but not systemic,” he said.

The decision by the Ukrainian nationalist stronghold of Lvov this week to declare “independence” from Kiev has upped the ante, creating a volatile climate in which the Ukrainian army may be forced to intervene to head off civil war.

“Ukraine is on the verge of splitting into two countries. We’re looking at events that we have not seen in Europe since the break-up of Yugoslavia,” said one City economist with links to Lvov. “When you have this level of hatred and mistrust, anything can happen.”

Ukraine’s foreign reserves are down to survival levels. Russia has so far kept the country afloat with a $3bn loan, the first tranche of a $15bn bailout, but further payments are in doubt.

Russia faces the choice of large losses from a default or the ever rising costs of propping up Ukraine's economy. Military intervention to subjugate the rebels in the Catholic strongholds of Western Ukraine orbit could lead to a quagmire.

The International Monetary Fund said in a report for the G20 summit this weekend that emerging market woes are the key risk for global recovery, warning that a trifecta of “capital outflows, higher interest rates and sharp currency depreciation” could set off a corporate debt crisis.

Societe Generale said in a new report that emerging markets have risen from 18pc of world output to 40pc over the past 20 years, implying that a broad upheaval in these countries today would have “much greater ramifications for the global economy”.

US$ vs. Ruble



Euro vs. Ruble



It is impossible to know what's ahead. A civil war could break out tomorrow, but so could another cease fire. The military could even oust the president.

The longer this simmers, the more pressure there is on emerging markets and the more pressure there is on any banks that lent money to Ukraine. Meanwhile, check out the collapse in the Ukranian Hryvna.

Euro vs. Hryvna



So far, things are still orderly. If a full scale civil war breaks out, it won't be.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/#4IlUWEZfwTuWUGVb.99

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